Page 24 - ARUBA TODAY

Tuesday 19 sepTember 2017 BUSINESS
A24

Another major deal in defense sector as global tensions rise

FALLS CHURCH, Va. (AP) — Korea.The U.S. military on carrying out airstrikes in Ye- space structures.Orbital man, Raytheon Co., Lock-
Northrop Grumman is buy- Monday flew advanced men since March 2015. ATK shareholders will re- heed Martin Corp. and
ing Orbital ATK for about bombers and stealth jets The acquisition of Orbital ceive $134.50 per share, a Honeywell International
$7.8 billion, with a backdrop over the Korean Peninsula would strengthen Northrop 22 percent premium to the Inc., have reached unprec-
of rising global tensions ac- and near Japan, three Grumman’s capabilities company’s Friday closing edented heights in 2017.
celerating big deals in the days after North Korea fired in military aircraft technol- price of $110.04. The deal’s Northrop Grumman Corp.,
defense sector. a missile over Japan.Saudi ogy and missile defense. total value is approximately which is based in Falls
Earlier this month, United Arabia has a pending deal Orbital ATK makes launch $9.2 billion, including debt. Church, Virginia, said that
Technologies said it would to acquire $500 million in vehicles and their propul- Shares of Orbital ATK surged after the deal closes, Orbit-
pay $22.75 billion for de- precision-guided muni- sion systems, missile tech- 22 percent at the open- al ATK Inc., based in Dulles,
fense contractor Rock- tions from the U.S., part of a nology, defense electron- ing bell Monday in a year Virginia, will become a sep-
well Collins.Legislation is proposed $110 billion arms ics, precision weapons, when the stock of most arate sector within its busi-
expected to pass easily package to Riyadh, which armament systems and major defense contractors ness operations.The boards
Monday pumping $700 bil- is enmeshed in a civil war in ammunition. It also builds have hit all-time highs as of both companies have
lion into the Pentagon bud- Yemen. A Saudi-led coali- up Northrop’s space op- clashes escalate. approved the deal and it’s
get as the U.S. responds to tion, which is supported by erations with Orbital’s satel- Rockwell Collins Inc., Boe- expected to close in the
growing hostility from North the United States, has been lites and advanced aero- ing Co., Northrop Grum- first half of next year.q
Fed likely to pare its bond portfolio even with outlook hazy

By MARTIN CRUTSINGER roadmap, and there is re-
AP Economics Writer ally a sense of relief to final-
WASHINGTON (AP) — ly get it started.”
When the Federal Reserve In June, the Fed spelled
meets this week, it’s sure out its plan for shrinking the
to take account of the balance sheet: It would let
economic consequences a small portion of bonds
of two devastating hurri- mature each month with-
canes. out being replaced.
It will also be awaiting an It would start with reduc-
announcement, possibly tions of $10 billion a month
within weeks, about its own — $6 billion in Treasurys
leadership: whether Presi- and $4 billion in mortgage
dent Donald Trump will ask bonds — and raise the
Janet Yellen to remain Fed amount quarterly until it
chair beyond February, reached $50 billion a year
when her term ends. later.
Amid the uncertainty, the To avoid spooking inves-
Fed is considered all but tors, the process would be
sure to announce after its so gradual that the Fed’s
meeting ends Wednesday balance sheet would re-
that it will begin paring its main above $3 trillion until
enormous bond portfolio late 2019.
— a process that’s likely to In this Wednesday, June 14, 2017 photo, Federal Reserve Chair Janet Yellen speaks in Washing- Some economists say they
cause consumer and busi- ton. The Federal Reserve wraps up a two-day meeting of its policymakers on Wednesday, Sept. think the figure could end
20, 2017.
ness loan rates to rise grad- (AP Photo/Susan Walsh) up around $2.5 trillion, still
ually over time. far above the $900 billion
It is, in a way, a kind of mini the Fed held in its portfolio
rate hike. ter the crisis struck to try to Doing so, even gradually, pared for it. in pre-crisis days.
The Fed’s balance sheet ease long-term borrowing will likely make some long- “The start to reducing Still, some economists say
has reached $4.5 trillion — rates, encourage spending term loans, like mortgages, the Fed’s balance sheet they worry that while the
roughly five times its size and energize an anemic costlier. is an action the markets Fed’s early reductions to its
before the financial crisis economy. Still, the Fed has tele- are ready for,” said Diane portfolio might not cause
erupted in 2008. Now, with a far healthier graphed its move for Swonk, chief economist at a stir, the cumulative sales
Its size reflects bond pur- economy, the Fed wants to months, and investors are DS Economics. could eventually unsettle
chases the Fed made af- begin shrinking its portfolio. thought to be well-pre- “The Fed has laid out a markets. q
US homebuilder sentiment falls in September

By ALEX VEIGA market remains positive. rather than poor. The index spective buyers also fell. new-home sales figures are
AP Business Writer The National Association of has been above 60 since Sales of new U.S. homes are due out next week.Sales
U.S. homebuilders are feel- Home Builders/Wells Fargo September last year. running ahead of last year’s stumbled this summer as a
ing less optimistic about builder sentiment index re- The latest index fell short of pace, reflecting strong de- supply crunch elevated av-
their sales prospects, re- leased Monday slipped to analyst predictions, which mand for homes as the erage home prices nation-
flecting concerns that re- 64 this month. That’s down called for a reading of 67, economy has continued to wide. In response, builders
building efforts following three points from a down- according to FactSet. create jobs. Still, sales post- are ramping up the supply
hurricanes Harvey and Irma wardly revised reading of Readings gauging build- ed their biggest one-month of new homes, providing a
will drive up costs for con- 67 in August. ers’ view of sales now and drop in nearly a year in crucial outlet. But the num-
struction labor and materi- Readings above 50 indi- over the next six months July, sliding 9.4 percent to ber of newly built properties
als.Even so, builders’ over- cate more builders view declined from last month. a seasonally adjusted an- available is still below histor-
all view of the new-home sales conditions as good A measure of traffic by pro- nual rate of 571,000. August ical levels.q